Turkey wages war on cryptocurrencies, and investors lose a fortune

Turkey wages war on cryptocurrencies, and investors lose a fortune

Turkey faces a crisis not unique in emerging economies: soaring inflation, plunging demand for its debt, and a bruising unemployment rate. Add to that a pliant central bank governor beholden to autocrat President Recep Tayyip Erdoğan who is not above installing his son-in-law as finance minister, and you get all the conditions for rampant cryptocurrency speculation.

That speculation came to an abrupt end two weeks ago when Turkey revealed plans to ban these software-based “digital tokens” as a form of payment on April 30 in an attempt to combat a flight from the tanking Turkish lira.

The move spooked investors. Days after the freshly installed head of the central bank made the announcement, Thodex, along with another exchange platform called Vebitcoin, collapsed. Thodex founder Fatih Faruk Özer escaped to Albania, and a number of his family members were detained by the authorities, according to state security officials.